Emerging Market Trends Impacting Call Center Strategy 2006

Emerging Market Trends

That Impact Your Call

Center Strategy

Prepared for NCOF

National Conference on Operations & Fulfillment

Disney’s Coronado Springs ResortDisney’s Coronado Springs Resort

Art Hall

VP, Sales & Customer Care Operations, NetBank, Inc.

President, Customer Relationship Management Association, Atlanta

1015 Windward Ridge Parkway

Alpharetta, Georgia 30005

Phone: 678-942-7537

Email: [email protected]

Agenda

• The Experience Revolution

• The Evolution of the Call Center

• Pressures Affecting Call Center Practitioners & Executives• Pressures Affecting Call Center Practitioners & Executives

• Emerging Market Trends

• What Does This All Mean to Us?

• Let’s Stay In Touch

The Experience Revolution

• Proliferation of e-business has led to a more knowledgeable and educated customer

• Customers expect seamless experiences across channels

• Five criteria for customer advocacy

– Trust

– Simplicity

– Transparency

– Benevolence

– Collaboration

• Customers are most scarcest and valuable asset

Strategy

Technology

Phase

• Answer calls on • Handle calls • Make customers • CRM integrate front and

• PBX

• Key systems

• Central office-based

• “CRM Suites” desktop

• Integration of front and

back office systems

• Skill-base routing

• Call blending

• Speech recognition

• QA

• ACD

• Routing calls

• Work force

management

• Conditional call

routing

• IVR

• CTI

• Call logging,

reporting

Phase PBX ACD Phone Center Call Center

The Evolution of the Call Center

Strategy

Management

Issues

first-come, first-

serve basis

• Efficiency and cost

containment

efficiently, politely,

and productively

• Use IVR to

automate calls

• Increase first call

resolution

go away back office systems to

improve customer

satisfaction and provide

differentiated, cost-

effective service

• Lack of

automation and

standards for

efficient customer

service

• Need to develop

and establish

service culture,

expertise, and

best practices

• Balance

enterprise needs

for productivity

with customer

satisfaction

• Leveraging

people, process,

and technology to

reduce calls to

live agents

Source: DMG Consulting LLC and eGain White Paper titled "Customer Interaction Hubs: What, Why and How?"

Strategy

Technology

Phase

• Open contact center and • CEM• Displace calls with web-

• Universal queues

• IP

• ERMS

• Chat

• Reporting

• CEM

• Multi-channel

communications platform

• Real-time analytics

• Text categorization of

unstructured data

• Performance management

• Web services

• Decision support

• Advanced KM

• IM

• Advanced collaboration

• Business performance

management

• Predictive analytics

Phase Contact CenterReal-time

Contact Center

Customer Interaction

Hubs (CIH)

The Evolution of the Call Center

Strategy

Management

Issues

• Open contact center and

customer data to enterprise

decision makers

• Integration of sales,

marketing, and service

activities

• CEM

• Dynamically anticipate

and provide customer

service in real-time

• Internal/external

collaboration

• Displace calls with web-

based self-service

technology

• Use contact center to

increase revenue

• Transition call center to multi-

purpose/multi-channel support

org that is logically consolidated

but physically dispersed

• Multi-skilled, flexible, and

cost-effective agents

• Build processes and systems

to capture, analyze, and use

near-real-time data

• Optimize contact center

interactions.

• Engage customers

• Manage all interactions per

common set of rules/knowledge

• Ultimately interact with any

customer, partner, or other system

direction, and understand the

inquiry, the answer, and how to

serve it betterSource: DMG Consulting LLC and eGain White Paper titled "Customer Interaction Hubs: What, Why and How?"

Pressures Affecting Call Center

Practitioners and Executives

• The positioning of the call center as a “strategic weapon”

• Taming the two headed monster of revenue contribution and cost containment

• Delivering on shareholder & customer value

• Managing the Total Customer Experience (TCE) across all channels

• Recognizing and managing “Moments of Truth”

Emerging Market Trends

• The Hype About Outsourcing & Offshoring

• Migrating the Call Center from a Cost Center to a Profit Center

• Speech Enabled IVR’s - A Money Maker or A Money Pit?

• Virtualizing Your Call Center Operations

• Employee Engagement in the Call Center

The Hype About Outsourcing &

Offshoring

• The worldwide market for customer service outsourcing is set to grow from $8.4 billion in 2004 to $12.2 billion in 2007.

• Through 2007, 80% of organizations that outsource customer service and support contact centers with the

• Through 2007, 80% of organizations that outsource customer service and support contact centers with the primary goal of reducing cost will fail.

• Up to 2008, 60% of organizations that outsource parts of the customer-facing process will encounter customer defections and hidden costs that outweigh any potential savings they derive from outsourcing.

Source: Gartner


Offshoring

• Offshore customer service outsourcing only represents a tiny fraction of the market - less than 2% in 2005, increasing to less than 5% in 2007.

• 70% of the top 15 Indian owned BPO startups that offer customer call center services will be acquired merged or be

• 70% of the top 15 Indian owned BPO startups that offer customer call center services will be acquired merged or be marginalized.

• Outsourced contact centers have higher staff turnover than in-house contact centers.

• Foreign vendors are beginning to feel the same pressures as their North American counterparts.

• North American centers are recognizing the need to compete with their offshore counterparts

Source: Gartner


Offshoring

• Call Center outsourcing can save as much as 25% to 60%

• Agent attrition and salary demands are being felt in offshore centers which creates upward pricing pressure

• Offshore outsourcing is complex• Offshore outsourcing is complex

• In order for North American outsourcers to remain competitive, they have expanded their range of offerings to include business process optimization (BPO)

Emerging Offshore Locations

The Caribbean

• More culturally aligned with North America• Call center agent population has more than doubled to 25,000 over the past two years

• St. Lucia, Jamaica & Barbados are attractive options• St. Lucia, Jamaica & Barbados are attractive options• Telecom deregulation is a major driver for North American companies to “near shore” their activities to the Caribbean

• Jamaica has the most call centers in the Caribbean (8,000 call center agents at the end of 2004)

• Dominican Republic is second to Jamaica and has been capitalizing on the U.S Hispanic Market


The Caribbean

• Downside –direct expenses (i.e. labor, telecommunications and computer) outlays costs often tops call center costs elsewhere

• Roughly $14 to $18 per agent compared to $9 to $11 in • Roughly $14 to $18 per agent compared to $9 to $11 in India and $12 to $13 in Mexico or the Philippines

• Lack of big labor pools is also a problem – can’t attract the mega call centers like India or China.

• The expected economic impact of call centers in the Caribbean will double to $4 billion by the end of 2006


Botswana

• Offers a stable, democratic government

• Highly educated and content populace

• English is the official language• English is the official language

• Generous subsidies for investor companies

• High literacy rate

• 200% credit on employee training


Botswana

• Scalability

• High per minute telco costs ranging from $0.36 to $0.45

• HIV Infection of to a one-third of the population• HIV Infection of to a one-third of the population

• Western stereotype of sub-Saharan Africa


Eastern Europe

• Midrange labor costs, multilingual population and affinity with Western Europe and North American makes Eastern Europe very attractive

• “Pan European” countries such as Czech Republic, Poland, Hungary and the Baltic countries are ideal locations for

• “Pan European” countries such as Czech Republic, Poland, Hungary and the Baltic countries are ideal locations for outsourcing

• Time differences and less cultural barriers for Western European and North American companies makes these outsourcing locations very compelling

• Eastern European countries are looking toward contact center outsourcing as a way to grow their economies.

• Sustainability of current labor arbitrage is a major concern• Experienced management is another concern

Best Practices for “Right Shoring” or

“Best Shoring”

• Go offshore for the right reasons

• Choose your model carefully

• Obtain organizational and employee buy-in• Obtain organizational and employee buy-in

• Be prepared to invest time and effort

• Treat your outsource/offshore suppliers as equals

• Create SPOC’s (single points of contact) for customer management and processes

Migrating the Call Center from a Cost

Center to a Profit Center

• Cross-selling and up-selling in the call center presents compelling opportunities for organizations to leverage existing customer base to achieve organic growth

• Revenue generation produced by an organization’s call • Revenue generation produced by an organization’s call center helps offset costs

• Cross-selling or up-selling products and services to customer’s is a way to establish “mind-share”

• Critical to define what “selling” is in the call center as a distinct form of selling in a more generalized direct sales environment

• Like strategy, cross-sale success in the call center is elusive



Top Concerns or Challenges to Driving Revenue from Contact Center Operations

Customer Service not responsible for Revenue

Agents not Properly Trained

Balancing Staffing with Service Requests

Contact Center Technology Infrastructrure

0% 10% 20% 30% 40% 50% 60% 70%

Contact Center Technology Infrastructrure

Contact Center Managed as Cost Center

Customers Don't Appreciate Selling during

Agents not Capable of Selling

Agent Incentives

Management Incentives

Customer Privacy Concerns

Do-Not-Call Legislation

Industry Legislation

CAN-SPAM Legislation

Source: Aberdeen Group December 2004



Perception Versus Reality (insert

excel spreadsheet; hide last

two columns)

Traditional Performance Metrics

Agent Monthly Sales Monthly Average Call

Integrated Performance

Metrics

Revenue Revenue Agent Monthly Revenue

($ thousand)

Sales Calls PerMonth

Monthly Commissions

Average Call Handling (minutes)

Agent A 121 894 $1,478 7.7

Agent B 116 786 $1,040 8.7

Agent C 82 430 $ 158 11.1

Agent D 50 556 $ 0 6.6

Average 53 433 $ 255 13.5

Revenue per Call

Revenue per Call;Index: avg=100

$136 111

$147 120

$190 155

$ 90 73

$123 100

Source: McKinsey Quarterly

Migrating the Call Center to a Cost


Recommendations & Thought Leadership

• Establish a “selling” mission statement that will start to behaviorally align the call center operations towards its new behaviorally align the call center operations towards its new strategic objective

• Heed the lessons of early CRM implementations

• Focus on “indirect” sales contributions just as much as you would “direct” sales contributions

• Recruit, hire and establish performance management plans towards service and sales orientation

• “Professionalize” the call center agent position

Speech Enabled IVR’s

A Money Maker or A Money Pit?

• 61% of speech users were highly satisfied with their most recent speech interactions

• 56% of users indicated that they would definitely or probably use the systemprobably use the system

• 7% stated they wouldn’t use speech recognition again

• Cost reduction is the driver for speech recognition technologies but we are seeing a shift towards increased customer satisfaction

• Speech Enabled IVR’s can reinforce your company’s brand



Vendors Competing for Speech Recognition Market Dominance

• Speech Specialists: Scansoft/Nuance, Telisma (France) • Speech Specialists: Scansoft/Nuance, Telisma (France) Loquendo (Italy)

• Speech Middleware Providers: IBM & Microsoft

• Speech Package Application Providers: TuVox, Fluency, Appetra

• Speech BPO Providers: Convergys, West, VoiceGenie, TellMe



Speech Enabled IVR Challenges

• Application not customer-centrically designed• Fear of low acceptance and success rates due to prior • Fear of low acceptance and success rates due to prior experiences

• Speech applications are developed as “operational stovepipes” instead of integrated as part of an overall customer management process

• Not mapping speech enabled IVR’s to call drivers pose a significant threat to ROI

• Like failed CRM implementations, speech enabled IVR’s not designed and implemented correctly dilute earnings and drive customers away



Critical Success Factors for Speech Enabled IVR Implementation

• Use ROI to drive requirements• Use ROI to drive requirements

• Design application for real world usage

• Conduct customer focus groups and usability studies

• Use Voice XML or SALT standards

• Integrate speech enabled IVR’s as part of an overall CRM strategy

• Integrate speech enabled IVR’s with the contact center to reduce AHT and offload “non-value add” contacts



Critical Success Factors for Speech Enabled IVR Implementation

• Continue to test the system• Don’t miss critical project steps in the design of speech • Don’t miss critical project steps in the design of speech enabled IVR application

• Current IVR requirements and design methodologies will not scale to speech applications

• Migrate from the business organization over to the IT organization

• Integrate into the fold of the Web self-service organization• Establish an application architecture for the voice applications and then choose the application development tools

Virtualizing Your Call Center Operations

• Two compelling customer service location based business model strategies:– Centralization or “Composition”– Decentralization or “Decomposition”– Decentralization or “Decomposition”

• Emergence of Internet Protocol (IP) technology offers a third strategic business model– Virtualization

• IDC predicts home-based agents will triple from 112,000 in 2005 to 300,000 by 2010

• Providers that are influencing the market for home based agents include Willow, West, Working Solutions & LiveOPS

• Technology enhancements, increasing oil prices and increased cost of living are the macroeconomic drivers


Benefits & Advantages

• Can save the equivalent of one to three full-time equivalents (FTEs) at each decentralized location

• Optimize the customer experience through the best use of self-service, local office or call center resourcesself-service, local office or call center resources

• Improve the leverage and focus of remaining decentralized resources

• Enables customer service representatives to act as one virtual labor pool through the emergence of converged IP contact center technology

• Allows distributed businesses to take advantage of call center resource utilization, process standardization and control over costs


Benefits & Advantages

• Allows decentralized agents to interact with customers via the existing computer network backbone instead of via a traditional telephony backbone

• Improved work/life balance is a significant driver for • Improved work/life balance is a significant driver for increased employee satisfaction

• Business Continuity and Disaster Recovery


Disadvantages

• Protecting and maintaining the security risks over consumer information is HUGE!

• Data Security & Customer Privacy are critical drivers of customer loyaltycustomer loyalty

• FTC has increased focus on data security breaches and the protection of consumer’s private information

• Requires different management strategies for home-based agents

• Lack of focus on the job


Best Practices

• Select candidates based on consistent performance and track record

• Create a virtual community to keep agents connected and provide for knowledge sharing updatesprovide for knowledge sharing updates

• Start with a small core team to action ideas and processes• Develop strong relationships and meet regularly with key vendors

• Implement a comprehensive security system designed to safeguard consumer information

• Invest heaving in quality monitoring to ensure both compliance and customer experience

Employee Engagement in the Call Center

• Agent attrition is a pain point for all of us in a management/executive capacity

• Employee Engagement captures the extent of an employee connected to an organizationconnected to an organization

• Causal linkages can be made between employee engagement, customer satisfaction & loyalty and financial performance

• Engaged employees are fully present, physically committed and emotionally energized

• Call Centers with engaged employees have more growth, productivity and less likely to exhibit “withdrawal”


The Challenges

• Research from Aon Consulting suggests:– 25% of employees in any given organization are engaged– 25% of employees in any given organization are engaged

– Approximately 50% of employees are engaged but would like to be contributing more

– The remaining 25% of employees are disengaged and have no desire to be engaged

• Call Center associates fail to go “above and beyond” the minimum requirements

• Struggling to find the “silver bullet” in recruiting and selecting the right person for the right job at the right time


Best Practices for Creating an Engaged Workforce

• Develop a candidate sourcing strategy

• Institute pre-hiring behavioral & simulation assessments

– Qwiz’s Qwiz Reveal

– FurstPurson’s FurstHire Hiring System Version 3.1

– Aon’s REPeValuatorTM

– SIVOX RealCall


Best Practices for Creating an Engaged Workforce

• Assess the following dimensions:– Can Do– Can Do

– Will Do

– Like To

– Know How

• Design an effective and iterative performance management systems

• Communicate the value of the call center employees to the organization

• Create a supportive and winning culture

What Does All This Mean To Us?

• The consumer landscape will change and expand significantly

• Call Centers are poised to be strategic weapons for organizations that employ and position them correctlyorganizations that employ and position them correctly

• Maturation of call center technology will continue to enable real time decision making and management of customer interactions across channels per a common set of business rules

• We must evolve and invest in improving the role and performance of the call center agent position

• The next 5-15 years of the call center market will be the most exciting yet!

Let’s Stay In Touch

Art HallVP, Sales & Customer Care Operations, NetBank, Inc.President, CRM Association (CRMA), Atlanta Chapter1015 Windward Ridge Parkway1015 Windward Ridge ParkwayAlpharetta, Georgia 30005Phone: (678) 942-7537Email: [email protected]